Internet Policy Guidelines to Bridge theDigital Divide in Thailand
44th Annual Conference of the Japan Section of the Regional Science Association“Effectiveness of ICT Policies towards Sustainable Economic and Social Development”

Worapat Patram
Senior Telecommunication Analyst
Interconnection Institute, National Telecommunications Commission
Abstract: This paper is aiming to describe the past and present situation of internet provision inThailand, and also identity the problems and obstacles which currently exist. Those problems
and obstacles has created a digital divide between the urban and rural area, and therefore, need tobe resolved to reach the goal of providing the internet service to all the un-served areas in orderto build a knowledge-based society in Thailand.
1. Introduction
For a long time, the State Enterprises have controlled and dominated Internet provision inThailand. There were previously 18 Internet Service Providers, all of which were concessionaires
under the former state-owned enterprise, namely, the Communication Authority of Thailand(CAT).
After the establishment of National Telecommunications Commission (NTC), an
independent telecommunications regulatory body, there have been a number of drivers used toprovide cheaper and faster internet access in order to proliferate the broadband penetration.
Apart from that, the Ministry of Education has also set up a policy to bridge a digital divide
between the urban and rural area with the ultimate goal of creating knowledge-based society forevery regions in the country. A number of researches had been conducted under the NTC
supervision to investigate the problems and obstacles in both demand side and supply side.
Examples of such problems and obstacles are the low penetration rate of PC in rural area,
unaffordable price of access for low income groups, lack of knowledge in English proficiency,
lack of network coverage in many remote areas, etc.
Following from the problems and obstacles identified, the NTC has decided to issue
many rules and regulations to resolve the problems, mainly in the supply side, in order to lower
the price to an affordable level and expand the internet network to the unserved area. Not only
that, the NTC has also set up strategies to increase the number of international internet gateway
providers, promote free and fair competition in the internet market, and regulate theinterconnection pricing. Such actions taken by the NTC has resulted in a cheaper and fasterinternet access. The number of broadband subscribers has increased from 192,003 in 1Q2005 to442,728 in 4Q2006 as a result of that.
2. Internet Situation in Thailand
Previously, internet service in Thailand is recognized as an international
telecommunication service in which the government has a statutory monopoly in ownership and/

operation. Another word, Thai Government has absolute control over the privileges to own andoperate these kinds of service, both internet service providers and internet access provider.
Therefore, any company from the private sector who intends to supply these services must only
obtain the granted licenses in term of Build-Transfer-Operate (BTO) concessions from the direct
responsible authority. In compliance with The Telegraph and Telephone Act and theCommunications Authority of Thailand Act 1976, the CAT, represents the public sector, isdirectly responsible for authorizing licenses to internet service providers and internet service
carriers.
In 2004, following the establishment of a Ministry of Information and Communication
Technology (MICT), there has been a drive to provide cheaper and faster Internet access, and toincrease both broadband and dial-up penetration. Whilst ADSL provision prices are now
competitive, in reality, without paying a much higher premium for dedicated bandwidth, thespeeds are still relatively slow due to the bottleneck at the international gateway.
By the end of 2005 broadband Internet users in Thailand totaled 0.62 million (437% from2002 to 2005) and Internet users 7.6 millions (16.6% from 2002-2005). PC and Internet
penetration is low outside of Bangkok. VoIP, whilst available, is technically illegal.
Table 1: Thailand – Internet Statistic

Source: National Statistic Office (NSO), NECTEC, and Service Providers extracted from Kasikorn ResearchInstitute

3. Problems and Obstacles
Problems in Policies and Regulations
Prior the liberalization in 2004, the former state-own enterprises, namely, TOT and CAT
were designated by law to provide basic telecommunication to the rural areas. However, under
the small subsidy from the government and lack of competition, both organizations were slow in/rolling out the telecommunication facilities. Only 1.4 million lines were installed from 1954 to1993.
The government recognized the problem and decided to set up a law to invite private
investment under the Build-Transfer-Operate (BTO) model. This solution could, however, only
solve the problem in the low-cost area because the private operators did not have any kind ofobligations to provide telecommunication facilities to the high-cost area. Consequently, theuniversal service problem, which happened in the past, still remains.
After the liberalization of telecommunication industry, the NTC has stipulated theregulations to enforce all the network operators to provide basic telecommunication service tothe rural areas, however, internet service was not included in the implementation plan.
Problems in Supply Side
Telecommunication investment is the same as other public utility services, such as
electricity and water, where the amount of investment is considered to be significant. To get themoney worth, one must consider many factors such as size and demand of target areas. Whenthe commercial analysis is considered, it is almost impossible for any telecom operators to riskily
expand their network to the high-cost area without any kind of subsidy from the government.
This can be illustrated in the following tables.
Project
Rural Telephone Project(1984 – 1992)
Rural Public Telephone
Project in sub-district level(1992 – 1996)
Rural Telephone Project inVillage Level(1996 – 1998)
Total

Number of lines
installed

Total Budget
Used(Million Bht)

Average Costper Line
(Million Bht)

5,439

1,100

0.2

44,254

6,066

0.137

Average
Revenue perLine480 Baht
116,693

15,9780.137

166,386

23,1440.474

Source : TOT Public Company Limited

From the table above, the average cost per line in the rural area is approximately 140,000Baht (4,000 USD), comparing to the average revenue per line, which is approximately 480
Baht/moth (13.71 USD). In order to reach the break even point, it would take roughly 24 years(not including tax, operating cost, and maintenance cost). The average revenue per line in theurban areas is as high as 7,500 Baht per month. This illustrates that the difference between theurban area and rural area is much difference revenue-wise, and the commercial investment in therural area is nearly impossible without government subsidy.
Apart from the lack of telecommunication infrastructure, there are some other concerns in therural areas which are considered to be obstacles to the expansion of the network as well, such aslack of electricity grid, lack of roads, and etc. This kind of problem needs to be resolved as afirst priority before rolling out the telecommunication facility.

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After the NTC has liberalized the internet market in 2005, the internet market wasvigorous with many new ISPs. From the economic point of view, such market should beconsidered as a competitive market and the service price should be lower accordingly. However,that was not the case. The price of internet service was still as high as before the liberalization ofinternet market. The reasons of such problems can be identified as follow:
Monopoly in International Internet Gateway (IIG) and Internet Exchange (IX)
• CAT Public Company was a former state-owned enterprise responsible for all
the international telecom activities. However, after the liberalization, the NTC still give thepriority of this particular service to the CAT in order to allow a transition period for CAT toadjust to the competitive market. Consequently, the CAT IIG monopoly price still remains.
• CAT also bundle its IIG service with Internet Exchange (IX) service and notallow those interconnecting parties to buy half circuit even though the interconnecting parties
can buy the international circuit outside Thailand with cheaper price and better quality.
Comparison of IIG Pricing between Thailand & Singapore
BandwidthPrice (Baht/Month)(Mbps)
ThailandSingapore1
100,000
8,400
10
661,375
76,800155
4,000,000
670,000300
7,500,000
310
970,000
Source: CAT & Pacific Internet (Singapore)

Difference
91,600584,575
3,330,000

Interconnection to local network
From the survey conducted by the NTC, many operators who owned the local
access network have squeezed the leasing price offered to the competing ISPs while providing acheaper price to its affiliates. Not only that, the quality of service is also lower from what isgiven to its affiliates as well.
Circle of Internet Service Problems in Thailand
High Investment
Cost and Digital
Divide between
Urban and Rural

No incentive toexpand network/

Most ISPs areconcentrated in
the urban area

Low Penetration
Rate – cannot
benefit from theeconomy of scale

Low Competitive
Level

Unaffordable
Service PriceProblem in Demand Side
Lack of Computer
When the number of internet penetration in Thailand is considered, it can befound that less than 15% of the population has access to the internet service and only 5% ofthat number is the broadband access. One reason behind the problem is the unaffordable
price of computer which is much higher than the average income of household.
Lack of Local Contents
From the statistic, most of the population in Thailand, particularly in the rural area,
is agriculturist and fisherman. Internet knowledge seems to be out of scope for their dairy life.
In the past, the government did not success in trying to create an appropriate local content tomatch the local interest. One reason is because there was no survey conducted to examine theinterest of each target rural areas which is much different from the urban area.
Lack of Internet Knowledge
In order to effectively implement the policy to facilitate the access to internet
service, one of the issues which cannot be ignored is to build knowledge and skill on the useof internet to the locals. Again, from the statistic, most of the heavy users are those who
range in the age of 15 – 30 while the number of internet usage for the people who range
above or below that is much lower.
High Service Price and Low Quality of Service
The internet service price on the dial up mode in Thailand is considered to belower than many countries in Asia. From the information received from TOT, it describesthat users who live in the coverage area can easily dial 1222 to connect to internet with accessfee of 3 (0.085 USD) Bahts per call and service fee of 2 Bahts (0.057 USD) per hour.
However, users who live outside the coverage area need to use alternative mode, such as
satellite to access to internet which is much more expensive.
4. Policies and Strategies
Internet as Mandatory Service in USO Implementation Plan
Considering that the world is now moving toward the information era andconvergence, when everything is on IP, the NTC should consider and include the internet service
as basic telecommunication in the USO implementation plan. Internet is now accepted as a tool
to create a knowledge-based society. Consequently, everyone should have an equal right toaccess into this powerful knowledge container.
Facilitate Alternative Technologies
Currently, the development of technologies, particularly in the telecommunicationindustry, has created many new innovations which can be deployed to reach the un-served area
more easily, for example, WiMax and Broadband Power Line (BPL). However, to facilitate thedeployment of these new technologies, all the responsible parties, including government,
research institute, telecom regulator, and private operators must actively work together andcollaborate on the project. The NTC may take the position as a host and set up the action planfor short and long term.

/Internet Friendly Regulation
The research from the American Enterprise Institute on the topic of Regulation
and Internet Use in Developing Countries has shown that the countries which stipulate strict
internet licensing and pricing regime would have a higher service price than those countries that
does not. From the research, the NTC should stipulate the rules and regulations based on
appropriateness of the market and incentive for market entry.
Policy to Facilitate Competition
To facilitate the efficient competition in the internet market, the regulator mustclearly recognize the value-chain of the internet provision. Many new ISPs are clearly in theposition that needs to interconnect with other network operators to deliver their service to thecustomer. With that, the regulator must clearly stipulate rules and regulations on access andinterconnection for internet in order to build a level playing field.
Effective Regulatory Regime for Infrastructure Sharing
Because the telecommunication business is the capital intensive business and also
the telecommunication resources are limited resources, many incumbents are reluctant to allow
the interconnection to their network facilities. However, sharing of facilities can reduce thenetwork redundancy.
Policy to Facilitate Use of Internet
Previously, the government implemented the top-down policy where each district
takes the federal policy into account and tried to implement it accordingly. However, suchapproach was not success because the policy was not matched the interest of the locals. The
mismatch created a difficulty to persuade locals to involve with the plan. Alternative approach,bottom-up policy, should be considered by dividing the plan in to three steps as shown in thefollowing figure:

Source: Alcatel Telecommunications Review 3rd Quarter 2004

Partnership CenterAll the responsible parties should create collaborative network to distributeinternet service to the locals and also facilitate the use of internet in many important activities.
In addition to that, the change agent in each area should be assigned to provide assistance totheir locals.

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